Thomas Sowell on Wealth Creation, Human Capital & Colonialism

Thomas Sowell on Wealth Creation, Human Capital & Colonialism. Thomas Sowell on American Interests (1983) discussing how to create wealth, the importance of human capital (skills) in groups, and colonial effects on wealth throughout the world.

Poverty and inequality are perhaps two of the most persistent natural states of humankind. As Sowell notes, we are all both 'poor and ignorant,' and inequalities continue to varying degrees across different demographic groups across different periods of time, all of which can be explained primarily by differences in how groups, tribes, states, countries and societies develop their human capital.

Perhaps the single most surprising economic fact of the past two hundred years is not the billion people living in poverty today, but rather the more than six billion people NOT living poverty today. There has been no growth in the number of people around the world living in poverty: There were a billion two hundred years ago and there are a billion today. The six-plus billion increased by a factor of almost 100, from perhaps 60,000,0000 then to 6,500,000,000 today.

But wait a minute demand the critics: Shouldn't we be able to eliminate ALL poverty and inequality if we simply take money from the wealthiest and give it to the poorest until we are all 'even,' we achieve true 'equity'? Take a minute and think how best to address that question.

The simple answer is 'no.' Absolutely no. First, the concept of relative poverty is a heavily subjective term, impossible to define in any universal definition, one that apples across 7.5 billion people. Second, even were we to ever achieve this perfect or even near perfect 'equity,' what's to follow? Can that balance be continued permanently? No. And third, this is because the natural accompaniment of wealth creation and prosperity is a simultaneous increase in inequality of just about everything, including money, education, wealth, income, intelligence, and more. Fourth, who is going to create and enforce both the system to re-distribute wealth and income AND to maintain an increase in wealth and income to re-distribute? If you can't sustain the latter, there is less and less to re-distribute. Churchill remarked that capitalism is the unequal sharing of prosperity while socialism/communism is the equal sharing of misery. Fifth, once we start a massive increase of wealth from the 'super wealthy,' much of that so-called wealth will disappear. Like stock wealth, home values, the value of an education. Wealth can be destroyed more easily than it can be created or distributed. Sixth, 'equal opportunity' or even the achievement of the ever-elusive concept of 'equity' will never produce equal subsequent outcomes.

I could go one, but it is not polite to 'pile on' once the critic is down.